How to Apply and Manage Discounts in QuickBooks: A Complete Guide

In the world of business, offering discounts is a great way to attract customers, increase sales, and foster loyalty. However, tracking and applying these discounts properly is crucial to ensure your financial records remain accurate and your customers are satisfied. Whether you’re offering a discount on a product, a special promotion for loyal customers, or a seasonal sale, QuickBooks provides several powerful features to help you apply and manage discounts efficiently.

By the end of this guide, you will understand how to apply discounts effectively in QuickBooks and how to track them in a way that ensures accuracy in your financial reports.

Why Offer Discounts?

Before we dive into how to apply and manage discounts in QuickBooks 2025, let’s take a moment to understand why offering discounts can be an essential business tool:

• Increase Sales: Offering discounts can incentivize customers to make a purchase they might otherwise delay or avoid.
• Attract New Customers: Special promotions and discounts are great ways to attract first-time buyers.
• Boost Customer Loyalty: Providing discounts to repeat customers shows appreciation and encourages them to continue doing business with you.
• Move Inventory: If you have slow-moving products, offering a discount can help clear out old stock to make room for new items.

Discounts are a great tool, but to make them work effectively, they need to be applied and managed properly within your accounting system. That’s where QuickBooks comes in.

Types of Discounts in QuickBooks

1. Item Discounts: These are discounts applied to individual products or services. They can be a fixed amount (e.g., $10 off) or a percentage (e.g., 10% off).
2. Invoice-Level Discounts: These discounts apply to the entire invoice, reducing the total amount due by a set amount or percentage.
3. Promotional Discounts: You can offer discounts for special promotions, such as a seasonal sale or limited-time offer.
4. Early Payment Discounts: If you offer customers a discount for paying invoices early, you can set this up within QuickBooks as part of your payment terms.
5. Volume Discounts: These discounts are given based on the quantity of products or services purchased.

Step 1: Setting Up Discount Items in QuickBooks

Before you can apply discounts, you need to set up discount items in QuickBooks. This ensures that your discounts are properly tracked and recorded in your financial reports.

QuickBooks Online

1. Log in to QuickBooks Online and click on the Gear icon in the upper-right corner.
2. Under Lists, click on Products and Services.
3. Click on New in the upper-right corner, then select Service from the dropdown menu.
4. Name your discount item (e.g., “10% Discount” or “Seasonal Sale Discount”).
5. In the Income account, select the account where you want to track the discount (typically “Discounts Given”).
6. In the Sales Tax field, select None (as discounts are not taxable).
7. Save the item.

Now you’ve set up a discount item that can be applied to invoices, sales receipts, and estimates.

QuickBooks Desktop

1. Open QuickBooks Desktop and go to the Lists menu.
2. Select Item List.
3. Click on Item, then New.
4. Select Discount as the item type.
5. Give your discount a name (e.g., “10% off” or “Holiday Discount”).
6. Choose the appropriate Income Account (such as “Discounts Given”).
7. Click OK to save the item.

By setting up discount items in QuickBooks, you ensure that discounts are recorded properly in your financial statements, allowing for accurate tracking and reporting.

Step 2: Applying Discounts to Sales Transactions

Once you’ve set up discount items in QuickBooks, you can apply them to your sales transactions. Here’s how to apply discounts to both individual items and entire invoices.

Applying a Discount to an Individual Item (QuickBooks Online)

1. Create a new Invoice or Sales Receipt for a customer.
2. Add the item(s) you are selling, and when you’re ready to apply the discount, click on the + Add button in the row below the items.
3. Select the Discount item you created earlier.
4. Enter the amount or percentage for the discount. QuickBooks will calculate the discounted price and apply it to the total.
5. Save and send the invoice to your customer.

Applying a Discount to an Entire Invoice (QuickBooks Online)

1. Open the invoice you want to apply the discount to.
2. Click on the More option at the bottom of the invoice and choose Discounts.
3. Enter the discount amount or percentage, and QuickBooks will apply it to the entire invoice.
4. Save the invoice as usual.

Conclusion

Offering discounts can be a great way to attract and retain customers, but managing them properly is essential for maintaining accurate financial records and protecting your bottom line. With QuickBooks, applying and managing discounts is simple, whether you’re offering item-specific discounts or invoice-level reductions. By following the steps outlined in this guide, you can easily set up and track discounts in QuickBooks, ensuring that your financial records remain in order while still providing great deals to your customers.